Iron ore reverses after Monday's supersized surge

Wang He/Getty Images

Iron ore spot markets fell on Tuesday, partially reversing Monday’s enormous surge.

According to Metal Bulletin, the price for benchmark 62% fines slipped 1.1% to $62.66 a tonne, snapping a four-day, 8.3% rally in the process.

On Monday, the benchmark price jumped 5.8%, its largest gain in over three months.

Lower grades, after outperforming one day earlier, suffered even larger losses with the price for 58% fines sliding 1.8% at $36.07 a tonne.

Ore with 65% Fe content also fell, albeit not to the same degree as mid-and-lower grades. It finished at $82.80 a tonne, down 0.6% for the session.

The losses were put down to more Chinese cities implementing limits on steel production due to worsening weather conditions. Only a day earlier these production cuts, scheduled to run from mid-November through to mid-March to improve air quality in northern Chinese provinces, were cited as the reason why iron ore markets rallied, fuelling optimism over demand once these curbs are lifted.

The weakness in spot markets came despite another jump in Chinese futures on Tuesday, adding to the enormous speculative-fuelled rally on Monday.

Dalian iron ore rose 3.2% to 469 yuan while coke and coking coal futures rose by 3.7% and 2.6% respectively, closing the day session at 1,831 and 1,185 yuan.

Rebar futures in Shanghai rose by a smaller 0.5% to 3,707 yuan.

Hinting that the losses in spot markets may continue today, Dalian iron ore futures softened in overnight trade, closing Tuesday’s night session at 463 yuan a tonne.

Coke and coking coal futures were also under pressure, closing well off the highs seen during Tuesday’s day session. Rebar futures in Shanghai were largely unchanged at 3,702 yuan.

SHFE Rebar ¥3,702 , -0.35%
DCE Iron Ore ¥463.00 , -1.17%
DCE Coking Coal ¥1,178.00 , 0.21%
DCE Coke ¥1,823.00 , -0.08%

Trade in Chinese commodity futures will resume at midday AEDT, around a hour before China will release international trade data for October.

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